On Tuesday evening, President Trump signed an executive order that could have a dramatic impact on the TV business.
The title of the order, “Addressing Misleading Direct-To-Consumer Prescription Drug Advertisements,” is innocuous enough, but for some media executives and ad buyers, it was seen an opening salvo in Health and Human Services Secretary Robert F. Kennedy Jr.’s war on pharmaceutical advertising.
And some of the biggest media and entertainment companies might feel the pain.
Speaking on the White House lawn after the order was signed, Kennedy called it “an historic change in the way that pharmaceutical advertising is done on television.”
Strictly based on the text of the order, the focus is on transparency and accountability for drugmakers, things that, quite frankly, most consumers are likely to support.
“My Administration will ensure that the current regulatory framework for drug advertising results in fair, balanced, and complete information for American consumers,” the order states. “The Secretary of Health and Human Services shall therefore take appropriate action to ensure transparency and accuracy in direct-to-consumer prescription drug advertising, including by increasing the amount of information regarding any risks associated with the use of any such prescription drug required to be provided in prescription drug advertisements, to the extent permitted by applicable law.”
But media buyers and ad sales executives had been quietly anticipating the move, which could cause a significant pullback in pharma ad dollars. The issue: Under the status quo through a regulation created in 1997, drugmakers only need to provide an overview of side effects in commercial advertising, and can refer consumers to a more compete rundown elsewhere, like on their website.
If drugmakers were forced to include a comprehensive and complete list of side effects, one media executive says, the result would be ads that are unworkably long for TV, which is built around 15, 30, and 60 second commercials.
“Prior to 1997 pharmaceutical advertisers were required to put all the side effects on their ads,” Kennedy said. “Many of them didn’t advertise because of what it did to the length of the advertising.
“They’re going to have to report all their side effects,” he continued. “In some cases, that might create an advertisement that’s four minutes long.”
As any TV marketer knows, a four minute ad is untenable on a lot of programming.
Kennedy has been promising a crackdown on pharma ads since entering the presidential race as a Democratic hopeful, and after dropping out and endorsing President Trump, he signaled that he would support a total ban on drug ads.
Of course, an advertising ban carries First Amendment concerns in a way that a regulatory crackdown does not.
According to the media measurement firm iSpot.tv, the pharmaceutical industry will spend $5 billion-plus on national linear TV advertising this year. Billions more will be spent on digital and streaming ads.
“Pharmaceutical advertising skews toward national television, and the loss of this key vertical could hurt television,” S&P Global analyst Naveen Sarma wrote in a report last December.
Tuesday’s executive order has been quietly dreaded in media circles for months, as reversing the 1997 rule was seen as the most likely path forward for Kennedy’s plan. The ad could cause some drugmakers to pull back on their ad spend, while others could stop entirely.
Certain genres, including TV news programming, will likely be hit harder than others, given the age of their viewership. Steve Tomsic, the CFO of Fox Corp. (which owns Fox News), told Wall Street analysts last year that a ban could impact a low single digit percentage of the companies total revenue, potentially hundreds of millions of dollars.
“Is it a concern? We shouldn’t be flippant about it,” he said.